Insurance Report. Vice chairman IUMI Facts and Figures Committee Cefor, The Nordic Association of Marine Insurers

Transcription

1 2011 Global Marine Insurance Report Astrid Seltmann Vice chairman IUMI Facts and Figures Committee Cefor, The Nordic Association of Marine Insurers

2 Global Marine Insurance Report 2011 Global lmarine Insurance Market overview Global Hull and Cargo market and results Global Offshore Energy market Addendum (for download only): Tables with underlying reported figures

3 Global Marine Premium 2010, by line of business Total reported: 25.3 USD billion 6.2% 13.2% 2010 New: China included. Impact: 1.96 USD billion 29.9% 50.7% Global Hull Transport/Cargo Marine Liability Offshore/Energy Total estimate of global marine market: <= 30 USD billion

4 Global Marine premiums reported 2008 to 2010 New: all figures including China Total +2.6% Offshore/Energy +5.6% Marine Liability 0.7% Reported change 2009 > Transport/Cargo Global Hull +1.9% +2.6% 2008 In 2009 reduction in global cargo volume, following the financial crisis

5 Market Shares 2010 Total reported: 25.3 USD billion Total estimate of global marine market: <= 30 USD billion Europe Ai/P Asia/Pacificifi North America 7.4% 8.4% Other 29.9% New: including China 54.3% Europe : Albania, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Nordic (Cefor), Poland, Portugal (2010 est.), Romania, Russia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, UK (IUA + Lloyds) Asia/Pacific i/ ifi : Australia, China (new!), Chinese Taipei, Hong Kong, India, Japan, Korea DPR, South Korea, Malaysia, New Zealand, Singapore North America : Bermuda, Canada, USA Other : Bahrain, Brasil, Congo, Egypt, Israel, Jordan (new!), Kazakhstan, Kenya, Lebanon, Morocco, Nigeria, South Africa, Tunisia, United Arab Emirates Countries in italics did not report in 2011

6 P&I Clubs International Group Gross Calls 2010 (Premium) Operational location Calls 2010: 28% 7% 3% Source: International Group of P&I Clubs 62% UK: 2.07 Nordic Nordic: 0.92 Japan: 0.23 p US: 0.11 Total: 3.33 (USD billion) US UK Japan

7 Global Cargo Premium by markets 2010 Total: 12.8 USD billion USA 5,6% Other markets 24,3% Belgium 2,5% Brasil 49% 4,9% New: China 9% France 6,3% Germany 9% UK (Lloyds)** 6%, UK (IUA)*** 2% Spain 2,1% Russia 3,3% Nordic 2,6% * Netherlands Japan 3,3% 14,6% ** Lloyds: includes fac. and prop. reinsurance *** IUA: data from Xchanging * Denmark, Finland, Norway, Sweden Italy 3,8%

8 Global Hull Premium by markets New:China Total: 7.5 USD billion Other markets 23 % USA 5 % UK (Lloyds) ** 13 % UK (IUA) ** includes facultative and prop. reinsurance 4 % *** data from Xchanging *** Spain 3 % 10% France Nordic 14 % 6 % Italy 5 % * Japan 9 % Korea, Republic 4 % Netherlands 4 % * Nordic countries (Norway, Sweden, Denmark, Finland)

9 World Seaborne Trade Volume and Trade Values, Global Cargo Premium, Index of evolution, 1995 = 100% /2011 upswing in trade, but unstable market conditions: Which effect on cargo market? World Trade Values World Export Volume Global Cargo Premium Some cycle irregularities due to exchange rates Source: World Trade Values: IMF

10 Index of Evolution of USD Exchange rate against selected currencies (exchange rates as of December each year, 2011 as of June 11) 180% 160% 140% 120% 100% EUR GBP JPY NOK 80% Since Financial crisis less correlation between exchange rates 60% Source: Norges Bank Exchange Rates Statistics

11 World Merchant Fleet and Global Marine Hull & Liability Premium, Index of evolution, 1995 = 100% 230% 210% 190% 170% 150% Average insured value per vessel (Cefor newbuilds and renewed vessels) Gross tonnage (> 300 GT) 130% 110% No. Ships (> 300 GT) 90% 70% 50% Global Marine Hull & Liab. Premium Sources: Indicators for World Fleet from ISL Bremen, Vessel value index: Cefor data as of

12 Change in insured values on renewed vessels, by year of renewal (= insured value on renewal / insured value previous year) Average annual change in insured values on renewed vessels 15.0% 10.0% 8.3% 7.0% 5.4% 5.4% 5.0% 24% 2.4% 0.0% Insured values decrease since 4Q 2008, with stabilization in % % % 0% -9.1% -15.0% -14.5% -20.0% Source: Cefor, The Nordic Association of Marine Insurers, figures as of 30 June 2011

13 Marine Hull and Cargo/Transport Gross* Ultimate Loss Ratio, U/W Years 1998 to % 120% 100% 80% 60% 40% Marine Hull Cargo/Transport Hull 2009/2010: Some improvement compared to peak years 2006 to But: Claim cost and loss ratios stabilize at high levels. No technical profit. 20% 0% * Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (usually 20% 30% acquisition cost, capital cost, management expenses)

14 Marine Hull Gross* Loss Ratio Underwriting years as reported after 1, 2, 3, 4 and 5 years 90% 80% 70% 60% Recent loss ratio level : 2003 Repair cost driven up by changing frame /2010 loss ratio conditions 2005 => Change in claims Previous loss ratio level 2006 pattern! % % /2010: Price-driving factors turn back to normal levels, but no stable environment => difficult to estimate effect on results.

15 Summing up Hull Unstable frame conditions continue Steel prices / repair yard capacity / exchange rates / commodity prices / vessel utilization /newbuildings / world trade /... Changes in market environment influence both income (vessel values) and cost (claim frequency and repair cost). Repair cost and claims frequency reached a peak in 2007/2008. Some improvement in 2009/2010, especially with regard to claims frequency, but loss ratios and claims costs stabilize at high levels. Catching up of trade in 2010 and higher utilization rates may cause repair cost to rise again. Major claims may smash a year s result and occur at any time!

16 Summing up Hull Hull technically at loss for 15 consecutive years! Something s stable after all Future Global Hull Market depends on Understanding di of dependenciesd bt between macroeconomic parameters and repair cost Good models to estimate expected claim cost (= risk premium) Trade / Fleet development Market discipline / capacity and as always: the impact of major claims

17 Marine Hull and Cargo/Transport Gross* Ultimate Loss Ratio, U/W Years 1998 to % 120% 100% 80% 60% 40% 20% 0% Marine Hull Cargo/Transport : New Zealand earthquake Japan earthquake & tsunami Floods Tornados New York storm 2011 level? 2007 to 2010: Clear deterioration of results profitability not ensured to 2006: * Technical break even: gross loss ratio does not exceed 100% minus the expense (usually Gross 20% 30% loss acquisition ratioscost, capital keep cost, below management 60% expenses) technical profit.

18 Marine Cargo Gross* Loss Ratio Underwriting years as reported after 1, 2, 3, 4 and 5 years 80% Recent loss ratio level % % 50% 40% 2010 loss ratio? Previous loss ratio level : 2009 Changing market demands upwards adjustment of claims reserves => Change in typical claims pattern As of December 2010: 2007/2008 improved, but still at high levels : starts high will end above 70%, if new pattern continues

19 Summing up Cargo Since 2008 reduction in insured values, effect on cargo income growth in cargo premium reflects recovery in world trade volumes, but economical environment remains unstable. Unusual upwards adjustment t of claims reserves. 2007/8 somewhat improved in 2010, but loss ratios stay high. If these prove to be correct, cargo will produce a technical loss loss ratio starts high. Expected to end above 70%, if new pattern continues. Claim amounts unlikely to decrease because of increased risk of accumulation, moral hazard, theft frequency, natural catastrophes. 2011: Increased impact of natural catastrophes (NZ earthquake, Japan tsunami, floods, tornados, US storms) and unstable economical environment may lead to further deterioration of results.

20 The complexity of interdependencies Macroeconomic parameters/ Claims cost Market environment Income Insurance results Unstable environment

21 Global Offshore Energy Premium by markets Brasil India 40% Japan 2.8% Other Italy 4.0% 3.5% 63% 6.3% 3.0% Malaysia 43% 4.3% UK (IUA) 3.3% Total reported: 3.37 USD billion 2010 Nigeria i 7.0% USA 7.3% No data: Nordic region, Russia, Kazakhstan. * UK (Lloyds) 58.6% * includes facultative and prop. reinsurance

22 Energy Mobiles, Day rates, Oil Price, Global Offshore Energy Premium Index of evolution, 2000 = 100% 500% 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% Average Day Rates Global Offshore Energy Premium Oil price, Brent Crude No. Contracted Rigs Sources: No. Contracted rigs, day rates: RigZone, Oil price: Energy Information Administration (US), 2011 figures as of

23 Offshore Energy Gross Reported Loss Ratios (excluding liability) U/W Years 1996 to 2009 As of December 2010: 350% % 250% 150% Soft market 2005 Katrina & Rita 2004 Ivan outstanding 2009/2010 no paid 12th year major hurricane paid 11th year activity, but paid 10th year 200% paid 9th year 2008 Ike paid 8th year paid 7th year paid 6th year 100% 50% 0% paid 5th year paid 4th year paid 3rd year paid 2nd year paid 1st year

24 Summing up Offshore Energy Volatile business, strong hurricane impact but reduced in recent years. Long time lag between accident and claims payment, due to technical complexity of theinsuredobjects. No regular claims patterns. Claims reserves set according to knowledge about individual claims to 2011: Little hurricane impact. Increasing impact by single lossevents! Events with high liability cost (2009 West Atlas, 2010 Deepwater Horizon) not reflected by reported loss ratios. In 2011 already three major single loss events ca. 1.6 $ bn.

25 Thank you! Iceberg! Sometimes you may need a new solution (or an actuary?)

26 The End Vive la France! Cédric Villani = famous French mathematician/physician. How could we know that a mathematician could be so artistic & creative? (Blogger about Cédric Villani after the Scandinavian Talk Show Skavlan 1. okt )